Build or Buy: Weighing the Pros & Cons of Each in the Current Housing Market
BY: Gretta Stilson
Primary Advantages of Building Your Own Home
Building a new house can offer several benefits and opportunities for getting exactly what you want while also possibly saving a little money. While you don’t have to know how to build a house yourself in order to get the best house for your needs, you do need to know some things before you dive into such a commitment.
- Everything is new. Moving into an existing property can sometimes come with hidden costs. For example, you might want or need to make home upgrades that are not entirely obvious during the purchasing phase. Replacing flooring, painting the interior or exterior, and landscaping can all add up quickly.
- There can be annual cost savings. Mechanical improvements in heating and air conditioning units over the past decade have made these units much more economical and energy efficient. You can easily save hundreds of dollars a year in utility costs and avoid the service plan normally carried with an older system.
- You have control over the home design. Within cost constraints, everything is what you want from the start, so you won’t have to spend additional funds making changes to a home after you purchase it. Plus, you can design for whatever your priorities dictate rather than trying to force your family or lifestyle to fit into an existing floorplan.
- Play a role in developing your local area. Community banks, like State Bank of Cross Plains, are very interested in improving the local economy, and residential home development is one of the most important ways that banks reinvest local deposit dollars back into local communities. Thus, customers looking to build a home can generally receive fast loan approvals at very competitive interest rates.
Primary Advantages of Buying an Existing Home
Even when you build a new home, it’s still unlikely that everything will be perfect. Whether you run into issues with permits or other delays, building your own home can come with some unexpected costs and unpredictable timelines.
- You can move in sooner. Once your offer is accepted, you can usually choose a closing date and move within 30-45 days. On the contrary, it can take anywhere from four to six months to build a home. That’s a long time to wait. You often have to make arrangements and plan accordingly.
- You'll avoid unexpected costs or delays during the building process. Whether you build or buy a home, the “perfect fit” might be out of your price range. You might also find that making a lot of changes and purchasing upgrades from the builder can be expensive. In addition, there are so many variables to consider when building – such as permits and inspections, subcontractor schedules, and weather issues – that it’s easy to experience delays that affect your final moving date.
- The purchasing process is more straightforward. There are more complicated legal considerations when you build a home. The agreement between you and the builder might limit your rights if there’s an issue with the home-building process and you need to take the builder to court. You may want to consider consulting an attorney to review the construction contract before you enter into the agreement. While not fool-proof, the process for buying a home is more standardized and straightforward.
- There are fewer transition issues to navigate. The move from one residence to another existing home is relatively uncomplicated. While you have to go through the time and effort of sorting, packing, and moving your belongings, it is often something that only has to be handled once. However, if you choose to build your home, you might have to move into temporary housing while you wait for your home to be built. Doing this can mean added expenses from hiring movers and paying for rented storage space.
Advice for Making Your Decision
So, as you might have suspected, there is no hard-and-fast rule. Just like the “rent versus buy” conundrum, the cost of building versus buying depends on a number of factors – some of which are beyond your control.